Posted by According to the Insurance Information Institute, usage-based auto insurance is becoming increasingly popular, with over 30 million vehicles currently enrolled in usage-based programs out of the 1.45 billion vehicles on Earth.
This type of insurance can be a good option, especially if you’re someone who aims to pay as you drive instead of the usual traditional premium system.
Due to this development, a good number of insurance firms now provide coverage for usage-based vehicles. This is a good feat; however, you could be faced with some challenges when opting for the right provider.
As a result, we’ve taken it upon ourselves to provide you with the top insurance companies for usage-based vehicles.
To begin with, let’s find out what usage-based auto insurance is.
What is Usage-Based Auto Insurance?
Usage-based auto insurance, which is also known as pay-per-mile or pay-as-you-drive insurance, is a relatively new type of car insurance that bases your premium on your actual driving habits.
This type of insurance uses a device in your car to track your driving habits, such as how fast you drive, how often you brake hard, how many miles you drive, etc.
It can be a good option for drivers who don’t drive very much, as they may be able to save money on their premiums.
However, it’s important to understand how this insurance works before you dive into it.
How Does Usage-Based Insurance Work?
Usage-based auto insurance works by tracking your driving habits and using that information to calculate your premium.
This is done through a device the insurance provider installs in your car, which sends information about your driving habits to the insurance company.
The device may track things like how fast you drive, how often you brake hard, how many miles you drive, and some other information they need to make a decision.
They also use this information to determine your risk level and set your premium accordingly. Some usage-based insurance programs may also offer discounts for safe driving habits.
Benefits of Usage-Based Auto Insurance
The following are the benefits of pay-as-you-drive insurance:
- It can help you save money on premiums for safe drivers
- Can help you become a safer driver
- It offers other benefits, such as roadside assistance
- Can provide peace of mind in case of an accident
- May provide valuable data about your car’s performance and maintenance needs
- Can help you find your car if it’s stolen.
List of 10 Usage-based Auto Insurance Companies
The following are the providers of pay-per-mile insurance:
Insight on the top 10 usage-based auto insurers
Progressive
- Year Founded: 1937
- Rating: 4.1
Pros
- Lower rates for safe drivers
- A convenient app to track your driving habits
- The ability to earn discounts for safe driving
- There is no need for a separate telematics device.
Cons
- The data collected by the app may be inaccurate
- Progressive’s app can drain your phone’s battery
- The discounts may not be as high as with other programs.
Description
Progressive is one of the leading providers of usage-based auto insurance. It has a program known as Snapshot.
This program uses a small device that plugs into your car’s diagnostic port and monitors your driving habits, including speed, acceleration, braking, and cornering.
The information is then sent to Progressive, which uses it to calculate your premium. Snapshot also offers feedback on your driving habits, so you can work to improve them.
Allstate
- Year Founded: 1931
- Rating: 4.0
Pros
- Their app is convenient for tracking your driving habits
- The ability to earn cash back for safe driving
- There is no need for a separate telematics device
- Discounts for safe drivers.
Cons
- The app can be distracting while driving
- It can be difficult to earn a high score
- The program may not be available in all states.
Description
Allstate provides a usage-based insurance program that uses a mobile app to track your driving habits.
The app tracks things like speed, braking, and cornering and gives you a score based on your driving.
You can use the app to view your score, track your progress, and earn rewards for safe driving.
State Farm
- Year Founded: 1922
- Rating: 4.5
Pros
- There is no requirement for the installation of a separate telematics device
- The app is easy to use
- State Farm offers several other discounts and benefits that can be combined with the DriveSafe & Save program.
Cons
- The program only tracks driving habits, not the number of miles driven
- There is no cash back or other incentive for safe driving.
Description
State Farm has a program known as the Drive Safe & Save program. It is a usage-based insurance program that tracks your driving through a mobile app or a plug-in device.
You can view your score and progress in the app, and you may be eligible for a discount on your premium.
State Farm’s program is unique in that it also includes a distracted driving feature that notifies you if you are carried away while behind the wheel.
Nationwide
- Year Founded: 1884
- Rating: 4.0
Pros
- The device is easy to install
- It does not track location or speed
- The program can help drivers save money on their car insurance.
Cons
- It can be difficult to earn a high score
- The device can drain the car’s battery.
Description
Nationwide’s SmartRide program is a usage-based insurance program that uses a small plug-in device to track your driving habits.
The device monitors things like speed, braking, acceleration, and time of day, and you get a personalized score based on your driving.
You can view your score and progress in the SmartRide app, and you may be eligible for a discount on your premium.
GEICO
- Year Founded: 1936
- Rating: 4.1
Pros
- This insurance is available to all GEICO customers
- It is a convenient way to track driving habits
- GEICO offers other discounts that can be combined with the DriveEasy program.
Cons
- The program only tracks driving habits, not the number of miles driven
- Some users have reported issues with the app’s accuracy
- The app can be a distraction while driving.
Description
Geico’s DriveEasy program is a usage-based insurance program that uses a mobile app to track your driving habits.
You can view your score and progress in the app, and you may be eligible for a discount on your premium.
DriveEasy is available in most states, and Geico also offers a discount on your premium if you sign up for it.
Geico’s program is unique in that it also includes a distracted driving feature that notifies you if you’re using your phone while driving.
Liberty Mutual
- Year Founded: 1912
- Rating: 3.8
Pros
- It does not require a separate telematics device
- The program is designed to help drivers become safer drivers
- It is simple to use and understand.
Cons
- It can be difficult to improve your score.
Description
Liberty Mutual’s RightTrack program is a usage-based insurance program that uses a mobile app or plug-in device to track your driving habits.
The program measures things like speed, braking, acceleration, and time of day and gives you a personalized score based on your driving.
You can view your score and progress in the app, and you may be eligible for a discount on your premium.
RightTrack is available in most states, and Liberty Mutual also offers a variety of other discounts and benefits for safe drivers.
Esurance
- Year Founded: 1999
- Rating: 4.0
Pros
- The device is easy to install and use
- Esurance offers other discounts that can be combined with the DriveSense program
- The program can help drivers become safer and more efficient drivers.
Cons
- The program does not track the number of miles driven
- It can be difficult to earn a high score
- Some users have reported issues with the accuracy of the app.
Description
Esurance’s DriveSense program is a usage-based insurance program that uses a mobile app to track your driving habits.
You can view your score and progress in the app, and you may be eligible for a discount on your premium.
Farmers
- Year Founded: 1928
- Rating: 3.9
Pros
- The program provides a personalized score based on driving habits
- Farmers offer other discounts that can be combined with the Signal program
- The program is backed by a strong and reputable company.
Cons
- The program only tracks driving habits, not miles driven
- Some users have reported issues with the accuracy of the program.
Description
This is one of the companies that provides usage-based insurance for vehicle owners. Farmers Insurance has a usage-based insurance program that uses a mobile app to track your driving habits.
This app monitors how you drive, and it gives you a score based on your driving. You can view your score and progress in the app, and you may be eligible for a discount on your premium.
USAA
- Year Founded: 1922
- Rating: 4.1
Pros
- The device is easy to install and use
- It provides real-time feedback on driving habits
- USAA offers other discounts that can be combined with the SafePilot program.
Cons
- It only tracks driving habits, not the number of miles driven.
Description
USAA’s DriveSafe & Save program is a usage-based insurance program that uses a mobile app to track your driving habits.
DriveSafe & Save is available in most states in the United States, and USAA also offers a variety of other discounts and benefits for military members and their families.
USAA is unique in that it is only available to members of the military and their families.
Metromile
- Year Founded: 2011
- Rating: 4.2
Pros
- It offers real-time tracking of mileage and driving habits
- Metromile’s rates are based on how much you drive, so you only pay for the miles you drive
- The company has a low-rate guarantee
- Metromile offers a wide range of discounts.
Cons
- Some customers may find the per-mile rate expensive.
Description
Metromile’s pay-per-mile insurance is a usage-based insurance program that charges you based on the number of miles you drive.
You can view your mileage and rates in the Metromile app, and you may be eligible for a discount on your premium if you drive less than average.
Metromile is unique in that it charges based on mileage, which can save money for low-mileage drivers.
FAQs
How does usage-based auto insurance work?
Usage-based auto insurance works by tracking your driving habits and using that data to calculate your insurance rates. The tracking is typically done through a small device that plugs into your car's diagnostic port or through a mobile app that you download onto your phone. The device or app then transmits data about your driving to the insurance company, which uses that information to determine your rates.
Is usage-based auto insurance cheaper than traditional auto insurance?
It depends. Usage-based auto insurance can be cheaper than traditional auto insurance if you are a safe driver. The programs typically give you a discount based on how safely you drive, so if you are a good driver, you could end up paying less for your insurance. However, if you are a risky driver, your rates could actually be higher with usage-based auto insurance. So, the answer to this question really depends on your individual driving habits.
What kind of data does a usage-based auto insurance program collect?
Usage-based auto insurance programs typically collect data on three main areas: mileage, driving habits, and location. Mileage data refers to how many miles you drive. This is typically tracked by a small device that is plugged into your car's diagnostic port or through a mobile app that you download onto your phone.
How is my driving data used by a usage-based auto insurance program?
The data collected by usage-based auto insurance programs is typically used to calculate your insurance rates. For example, if you are a safe driver, the program may offer you a discount on your insurance. On the other hand, if you are a risky driver, your rates may be higher. Some programs also use the data to provide you with feedback on your driving habits, such as tips on how to improve your driving.
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Conclusion
Usage-based auto insurance is a growing trend in the insurance industry. The programs are designed to reward safe drivers with lower rates, while also providing feedback and other benefits.
However, you have to know that these programs are not right for everyone, and it’s important to consider the privacy implications of tracking your driving habits.
Overall, usage-based auto insurance can be a good option for drivers who want to save money and be more aware of their driving habits.